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Various aspects relating to the central bank digital currency (CBDC) and private cryptocurrencies came into focus at the meeting of the central board of the Reserve Bank of India on Friday. This comes in the backdrop of companies fearing a ban on cryptocurrency if the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ is introduced and passed by Parliament.
The industry is expecting the government to regulate cryptocurrencies and not ban them. However, Reserve Bank of India (RBI) Governor Shaktikanta Das had earlier underscored that there are serious concerns on macro-economic and financial stability when it comes to cryptocurrencies.
Most of the RBI board members are believed to be on the same page as the Governor.
The Bill
The aim of the Bill is “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. It also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
A CBDC is a legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.
“Private virtual currencies sit at substantial odds to the historical concept of money. They are not commodities or claims on commodities as they have no intrinsic value; some claims that they are akin to gold clearly seem opportunistic,” said RBI Deputy Governor T Rabi Sankar in a speech in July 2021.
“Usually, certainly for the most popular ones now, they do not represent any person’s debt or liabilities. There is no ISSUER. They are not money (certainly not Currency) as the word has come to be understood historically,” Rabi Shankar said.
The meeting of the central board of Directors of the RBI, held at Lucknow under the Chairmanship of Governor Shaktikanta Das reviewed the current domestic and global economic situation, evolving challenges and remedial measures.
The board also reviewed half yearly income statement of the RBI for the half-year ended September 30, 2021 and discussed various areas of operations, including the functioning of the local boards, activities of select central office departments and the draft report on trend and progress of banking in India, 2020-21.
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